In early July, a polyester factory promotion pushed the average sales-to-production ratio of polyester filament yarn sample enterprises to 153.8%, prompting moderate restocking by downstream users. Yet this figure is far from a sign of market recovery—it represents a brief emotional release against a backdrop of falling international oil prices and sharp demands from customers for equivalent fabric price cuts.
Broken cost transmission: upstream reluctant to concede, downstream hesitant to buy
International oil prices have retreated from their peaks after US-Iran negotiations to pre-Spring Festival levels, a shift quickly interpreted by downstream customers as a reason for fabric price reductions. Customers widely demand that textile firms synchronize price cuts, arguing that raw material costs have softened. However, the actual transmission chain is not smooth: polyester factories have not directly lowered prices but offer limited reductions through time-limited promotions, with each decline kept extremely modest.
The reason lies in a fundamental change in the profit model of polyester plants. At a current operating rate of 70%, a factory can maintain a profit of 500 yuan per ton; if it cuts prices to boost sales, volume may rise but profit would plummet to 100 yuan per ton. More critically, existing inventory of polyester filament was produced using previously high-priced raw materials, making the book cost far higher than current market prices. This batch of yarn must be slowly digested and cannot be quickly cleared.
Industry public data shows that after years of 'anti-involution' efforts, polyester factories have formed a consensus of 'preferring lower output to selling cheap.' The price wars of previous years caused heavy losses across the sector, so now even at the cost of sacrificing some capacity, they aim to maintain price floors.
Weaving enterprises trapped in a 'waiting loop'
For weaving enterprises, the polyester price cuts have not sparked purchasing enthusiasm. On the contrary, each promotion reinforces the expectation that 'prices might fall further.' While the early-July promotion saw sales-to-production exceed 100%, the previous promotion recorded only 70%, indicating extremely limited actual downstream demand. Operating rates are already low, raw material consumption has slowed, and companies have no incentive to build large inventories.
July is traditionally the time for purchasing autumn and winter fabrics, but this year is completely different. Last year, production halts were severe due to overcapacity from full operations in the first half leading to inventory pile-ups; this year, weaving companies are 'scared' by violent raw material price fluctuations—prices swing wildly, and no one dares to increase production easily. Market confidence is as fragile as paper, and price softening actually reinforces the waiting mentality.
Second-half outlook: a gamble on product popularity
The textile industry is currently in one of the weakest periods of the year, with order volumes notably low. Yet companies cannot completely avoid preparing for the second half, leading to two sharply different forecasts:
- Optimistic scenario: demand recovers in the second half, fabric prices rise temporarily amid low inventory, and existing stock becomes a 'hot commodity.'
- Pessimistic scenario: fabric prices remain low or decline further, and the more produced now, the deeper the loss later.
For many weaving enterprises, production decisions over the past two months are essentially a gamble—betting that the products they make now will suddenly become popular in the second half. This gambling-like production arrangement reflects the entire industry chain's passive position under dual uncertainty of costs and demand.